From the Chairman's Desk
By Russell G. Golden, FASB Chair


How the FASB Addresses Implementation Issues

An important part of the FASB’s mission of developing a high-quality standard is monitoring its implementation and assisting preparers and other practitioners in their understanding and ability to consistently apply a new standard. Our goal is to be in position to help our stakeholders and facilitate a smooth transition.

To position organizations to have a successful transition to our standards, we undertake a variety of initiatives focused on educating our stakeholders, helping preparers and practitioners interpret the standards, and making any necessary clarifications to the standards to address unintended consequences, if any.

In this column, I would like to specifically focus on three of our educational initiatives:
  1. Conducting outreach with stakeholders
  2. Working with Transition Resource Groups (TRG), and
  3. Addressing stakeholders’ technical questions.

Conducting Outreach

Stakeholder outreach is a key component of our standard-setting process. Our stakeholders generally are familiar with the many ways we perform outreach when creating and finalizing a new standard. But our outreach does not end when the standard is issued.
Our outreach does not end when the standard is issued.

This continuing outreach serves two purposes: first, to educate stakeholders about the standard, and second, to understand what implementation-related questions are out there—especially those that are reoccurring. We view this as an important element of our process, which helps us understand if application of a new standard is consistent with what the Board intended.

Types of Board and FASB staff outreach include:
  • Meeting individually with preparers, auditors, and regulators
  • Addressing preparer organizations in affected industries through small group meetings
  • Issuing “Plain-English” educational materials such as videos, articles, and fact sheets
  • Discussing implementation progress with FASB’s advisory groups
  • Presenting at conferences to explain the new standard
  • Participating in CPE provider training sessions to train them on how to educate their stakeholders about the standard (we call this “training the trainer”), and
  • Conducting our own CPE webcasts aimed at preparer and auditor audiences.
This proactive approach helps us learn about implementation concerns firsthand so that we can address them efficiently.

Transition Resource Group

When the FASB issued the revenue recognition standard in 2014, we created our TRG (which you can read about in another article in this issue) to solicit, analyze, and discuss implementation issues arising as companies review and implement the standard. The group continues to inform the Board about those issues, which helps us determine what action is needed to address them.

Based on that successful model, we created the credit losses TRG with one difference: this time, we formed the TRG before the standard was issued, not after.

We plan to replicate this proactive approach for some, but not all future standards. Forming a TRG early will help us:
  • Avoid having to make revisions to the standard after it is issued
  • Reduce diversity in practice, and
  • Proactively address preliminary cost-benefit concerns.
We believe the TRG is most useful for comprehensive standards that have significant and broad changes.
Additionally, a TRG provides stakeholders with a forum to learn about a new standard from others tasked with implementing it, such as financial statement preparers, auditors, users, and regulators.

Finally, and perhaps most importantly, a TRG enables stakeholders to submit potential implementation issues for public discussion—and enable the group to address issues that likely will be faced by many other practitioners.

We do not expect to create a TRG for all future projects. We believe the TRG is most useful for comprehensive standards that have significant and broad changes.

Technical Inquiries

The FASB stands ready to address questions and concerns about implementing our standards—both before and after they are issued.
Comment letters and other stakeholder communications are critical to our ability to come up with the best standard-setting solutions. They also are important to helping us root out implementation issues that arise after a standard is issued.

Our Technical Inquiry service makes it easy for stakeholders to submit questions. In addition to addressing individual concerns, this service helps us identify reoccurring questions, themes, and issues that may need to be addressed more broadly. The service also helps our stakeholders obtain input on applying our standards to their specific circumstances.

Through outreach, TRGs, and responsiveness to technical inquiries, the FASB stands ready to address questions and concerns about implementing our standards—both before and after they are issued.

As always, we are committed to continuing our dialogue with stakeholders throughout the entire process and ensure a successful transition. In the end, your input can help us develop operational standards that provide financial statement users better information.